Loaning bitcoin to family - bad idea? \ stacker news ~bitcoin

1417 sats \ 20 comments \ @HardRich 29 Nov 2023 bitcoin

My brother is doing some home renovation and has asked to borrow some money. I've loaned fiat to him in the past and he's always paid me back ahead of time and with interest. He's a trustworthy dude and I have no problems lending him money.

However, I don't have extra fiat laying around and I don't want to cash out any bitcoin. My thought is to loan him, let's say 0.5btc, and tell him that I want 0.5btc back in 6-18 months. I'm not looking for yield. I'm totally fine if bitcoin goes down in fiat terms when he pays me back - like I said, I'd just be hodl'ing anyway. It'd be dope for my bro if he got $15k worth but only had to pay back $12k.

My concern is if bitcoin goes up too much. If it goes up a bit and he pays me $20k on a $15k loan, that's no big deal - I'm sure he's good for it. But, what if bitcoin goes up like crazy and he needs to spend $100k to buy 0.5btc to give back to me? I'd feel bad to make him pay that back, but it'd also not be fair for me to have a smaller stack.

What do folks think? Will bitcoin not move too much over the next 6-18 months? Should I not loan bitcoin regardless of the situation? Any other risks to consider?

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392 sats \ 0 replies \ @Zepasta 29 Nov 2023

A big no

227 sats \ 0 replies \ @antic 30 Nov 2023

If you want equal BTC in the future and he sells it today to pay for things in fiat he’s going to default on you for sure.

Anyone who doesn’t manage to acquire 100,000,000 satoshis over the next year will probably never acquire that much in their lives.

110 sats \ 1 reply \ @fm 30 Nov 2023

Should I not loan bitcoin regardless of the situation?

No, ask for a loan against your bitcoin instead, Give him the cash, Ask him for the cash Done

21 sats \ 0 replies \ @HardRich OP 30 Nov 2023

Smart! A few others have said the same thing. It seems like the best approach. Thanks!

21 sats \ 2 replies \ @orangecrush 30 Nov 2023

If you are a custodial risk taker, Loan fiat against your bitcoin on unchained and have him make the payments.

0 sats \ 1 reply \ @HardRich OP 30 Nov 2023

Interesting. This may be the better way to do it. Thanks for the comment!

20 sats \ 0 replies \ @orangecrush 30 Nov 2023

Please also consider how you distribute downside risk; if bitcoin drops severely in price, your position could be partially liquidated. Will your loanee help to make you whole?

21 sats \ 0 replies \ @911 29 Nov 2023

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10 sats \ 1 reply \ @TheBTCManual 30 Nov 2023

Oef, too much can go wrong here and way too much drama for me

Have you considered a P2P loan against your Bitcoin on hodlhodl? Get the stables and give it to your brother to pay back?

0 sats \ 0 replies \ @HardRich OP 30 Nov 2023

I hadn’t thought of it. Someone mentioned similar so I’m looking into it now - seems like the better route. Thanks!

10 sats \ 0 replies \ @0xbitcoiner 29 Nov 2023

It is impossible to know with any degree of certainty what will happen in the coming months. Anyone who tells you otherwise is lying. The market sentiment is bullish, but that doesn't guarantee anything. Besides the intention being good, I wouldn't do it for the reasons you already mentioned.

1 sat \ 0 replies \ @franzap 30 Nov 2023

Assume it will go up. I wouldn't risk it

1 sat \ 0 replies \ @0245bdaef2 30 Nov 2023

I do not advise this

0 sats \ 0 replies \ @antic 30 Nov 2023

another way to think about this risk here:

If he were to borrow bitcoin from you for 18 months and have to pay it back in equal bitcoin, then he's effectively buying an 18 month PUT option on BTC.

Would you short BTC from now until the next 18 months? What premium would you put on that risk? That's the risk value/cost.

0 sats \ 0 replies \ @designsats 30 Nov 2023

Home renovation doesnt seem like a productive business...

0 sats \ 0 replies \ @wavepruner 30 Nov 2023

If it was for like a liver transplant...yea

Home renovation? Hard no. That is simply a luxury. Bitcoin is on the verge of a potential mega rally. Have him wait 2 years.

0 sats \ 3 replies \ @justBrian 30 Nov 2023

There is this thing called cash that would eliminate any possibility of what you are worried abt happening...from ever happening.

0 sats \ 2 replies \ @HardRich OP 30 Nov 2023

True, except for if I have cash laying around I’d buy bitcoin so I’m in the same boat. Cash now = Bitcoin now.

0 sats \ 1 reply \ @justBrian 30 Nov 2023

But youd give this bitcoin to your brother, then hed liquidate it and have to pay you back in btc terms ? Instead of just liquidating it yourself, then making him the fiat loan ?

0 sats \ 0 replies \ @HardRich OP 30 Nov 2023

If I liquidate I’d pay cap gains. I’d also lose my stake in bitcoin - so I’d miss out on any price rally.

Based on other comments, seems the best is to use something like Unchained Capital to get a loan with my Bitcoin as collateral, while my bro pays back Unchained.